No need to use Daemon Tools or anything. Start DOSBox and type the following:
Code:
mount C <Folder you want to use as hardrive>
imgmount D <Path to CUE file> -t iso
D:
GO.BAT
You can add these to the [autoexec] section of DOSBox.conf if you're not running any other games with it. If you do, I suggest you to use an interface like DBGL or D-Fend Reloded.